SmartAsset delivers home-buying decision tool

SmartAsset launched on Tuesday a home-buying decision-making tool that it claims will deliver significantly more personalized advice than existing online mortgage calculators.

The so-called "decision engine" informs users of the maximum amount they can safely spend on a house with a given down payment. It then tracks the user's financial health over the life of the mortgage, factoring in not just interest rates, but closing costs, borrowing caps and state and local taxes.

It delivers advice in the form of interactive charts and graphs accompanied by written tips to guide a user through the complicated web of financial decisions related to purchasing a house. The user can override the decision engine's recommendations and watch the tips and graphics adjust accordingly. The interface, which CEO Michael Carvin said was inspired by Mint.com, features colorful graphics and interactive slider bars that encourage users to explore financial what-ifs.

A number of mortgage calculators are available online, perhaps most notably Zillow's. Financial decision-making applications are growing increasingly complex, according to Steve Schultz, COO of Pageonce, which makes a bill payment app that offers some financial advice. To be competitive, financial applications must be able to handle multiple variables and tailor their advice to individual users, said Forrester Research analyst Brad Strothkamp in an email.

SmartAsset has sought to account for many of the variables that make one prospective buyer's financial situation different from another's. The tool asks for both income and savings, for example. A user can adjust the amount of the down payment, or explore the potential tax benefits of buying in one suburb instead of another. The recommendations rely on the company's information on federal, state and local tax codes. They also benefit from real-time data from participating banks and mortgage companies.

The project began when Carvin, who at that time worked in the financial industry, began trying to buy a house. He quickly realized, he said, that many home-purchase calculators available on the Internet leave out important factors, such as closing costs.

"A $400,000 house can be cheaper than a $350,000 house. The financial services industry has deliberately made these decisions more complicated than they need to be," he explained.

Carvin built an elaborate financial model in Excel to guide his decision. Such elaborate calculations of risk, reward and compounded interest are a tool of the financial trade. CTO and co-founder Philip Camilleri then turned the spreadsheet into the application that powers the decision-making engine. The company is now emerging from Y Combinator's startup accelerator.

SmartAsset will monetize by collecting a finder's fee for each consumer it refers to a lender. The company receives the same amount, regardless of which lender the user ultimately borrows from, Carvin said, so it can deliver unbiased advice.

SmartAsset will roll out additional decision tools to guide users through going back to school and retiring in the coming months, the company said.

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